May 21, 2019

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Too dependent on exports and investment

Exports and Investment


continued from > The Case for Investing in China Now

• The government is squeezing the cash flow of property developers to force them to develop their idle land banks. It’s boosting the supply of new housing for sale, which is depressing prices.

• Although domestic consumer demand continues to grow fast, it’s off a low base. Private consumption is still only one-third of the Chinese economy, which remains far too dependent on capital investment and exports.

• Government policy remains committed to maintaining strong economic growth, which means Beijing will take its feet off the brakes the moment there are any signs of too much of a slowdown. [Read more…]

The Case for Investing in China Now

Since equity markets bottomed in July, US stocks have risen about 17 per cent – but China-listed shares have done much better, climbing about 24 per cent. Yet that has happened despite very different financial environments.

In the US the American central bank (“the Fed”) is flooding its system with money, deliberately aiming to promote a stock-market boom whose “wealth effect” it hopes will stimulate consumer demand, strengthen economic recovery and create jobs. [Read more…]